Updated 6:32 pm, Sunday, January 20, 2013

ALBANY — State oversight of power utilities needs to be strengthened, while the beleaguered Long Island Power Authority should be scrapped altogether, according to preliminary recommendations from a panel charged by Gov. Andrew Cuomo with investigating poor response to catastrophic weather events.

The panel, created under the century-old Moreland Act, has been charged with examining utilities' response to Superstorm Sandy, which hammered downstate regions in October, as well as 2011's tropical storms Irene and Lee, which caused widespread flooding upstate.

LIPA owns the region's power grid and contracts with private companies to maintain it; the current contractor, National Grid, is slated to be replaced by Public Service Enterprise Group in January 2014, beginning a 10-year contract.

In a Monday presentation to Gov. Andrew Cuomo and his cabinet at the Capitol, the panel's commissioners described LIPA's current structure as dysfunctional and simply "a mess," in the words of Nassau County District Attorney Kathleen Rice. In an inventory of LIPA's sins, they noted its outmoded technology, from its communications grid to an antiquated COBOL computer system, as well as its failure to order basic tree-trimming maintenance that would have lessened the impact of destructive weather.

The panel offered three options for the future of power delivery on Long Island: handing it off to an investor-owned utility; expanding LIPA and giving it a direct role as opposed to the current middleman position; or having an existing public authority take over its current duties.

The first option, privatization, posed the fewest risks in terms of service and cost to taxpayers, the panel concluded.

Commission co-chair Ben Lawsky, superintendent of the Department of Financial Services, said that LIPA currently carries about $3 billion in unsecured debt ($7 billion in debt related to the decommissioned Shoreham Nuclear Power Plant, against $4 billion in LIPA assets) that would have to be disposed of — a complex transaction, he said.

Former state Attorney General Robert Abrams discussed proposals for boosting the largely toothless enforcement by the state Public Service Commission, ranging from better PSC advance work assessing utilities' emergency response plans to setting larger penalties for operators that fall short. The state, he said, should also be given explicit power to lay down the ultimate sanction of yanking a chronically underperforming company's operating certificate.

"I don't believe the PSC is really a regulator," said Cuomo, who asked for the early briefing to help him prepare for Wednesday's State of the State address. He described the current dynamic between utilities and the state as an "impossible relationship" — something he's averse to in public and in private manifestations.

Asked about his own failure to name a full slate of appointees to LIPA's board since taking office, Cuomo said he "absolutely" would not take a measure of the blame for the authority's deficiencies. Its structure, he said, was the fundamental problem, not vacancies on the board.

The panel will take up issues related to upstate utilities' performance in the weeks ahead.